Maximizing Your Investment Returns: Tips for Choosing the Right Private Equity Real Estate Sponsor

When it comes to investing in private equity real estate, one of the most critical decisions an investor can make is choosing the right sponsor. A sponsor can make or break an investment, as they are responsible for identifying, acquiring, managing, and ultimately disposing of the property. With so much at stake, it’s essential to do your due diligence and choose a sponsor who has a proven track record of success, a solid financial foundation, and a team of experts with the skills and experience to execute the investment strategy. In this article, we’ll explore the key factors to consider when selecting a private equity real estate sponsor, so you can make an informed decision and maximize your investment returns.

Private real estate investment funds have become more attractive among investors in recent years, particularly for those seeking higher returns than traditional investments such as stocks and bonds. Investment in a fund can provide a way to diversify, seek favorable tax treatment, and invest in an asset that is not correlated to the whims of the public equities market.

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However, investing in private real estate requires a different approach than investing in publicly traded real estate investment trusts (REITs) or other securities because it often involves choosing a sponsor to manage your investment.

If 30 years as a private equity real estate sponsor has taught us anything, choosing the right sponsor can be a complex and critical decision, as the sponsor will be responsible for identifying, acquiring, and managing the underlying properties in which you will be investing. Here are some key factors to consider when selecting a private real estate sponsor:

Track Record

One of the most important factors to consider when selecting a private real estate sponsor is their track record. Look for a sponsor with a proven history of successful real estate investments. This can be demonstrated through the performance of previous funds, case studies, or references from previous investors. Consider their returns, how well they have executed their investment strategy, and whether they have been able to consistently deliver results to their investors. For over three decades, Wilkinson Corporation’s full-cycle, multifamily funds have returned all investor capital and produced strong returns. We make our track record of selling over 50 multifamily properties available to our clients during their due diligence process.

Investment Strategy

Make sure the sponsor’s investment strategy aligns with your investment goals. Some private real estate sponsors focus on specific types of properties or geographic areas, while others may have a more diversified approach. Consider your risk tolerance and the potential returns of the investment strategy and ensure that it is in line with your investment objectives.

Development and acquisition strategies involve varying levels of risk, which is why we have chosen to provide our clients with investment options specific to their unique needs. Wilkinson tailors investment strategies for clients who are focused on income and for those who are focused on growth or any combination of the two.

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Financial Stability

Although the success of your investment is technically based on the success of the underlying properties, the financial stability of the sponsor can also have a significant impact on your outcomes. You are relying on the expertise, personnel and resources of the sponsor to manage every element of the formula required for success.

Many vital activities from careful investment selection and due diligence to disciplined day to day asset management are dependent on a sponsor who has the financial stability to focus the right resources at the right time on the levers that can influence the outcome of your investment. So make sure the sponsor you choose has demonstrated years of sufficient financial strength to continue managing investments well during upswings and downswings of the market. You wouldn’t want to work with a sponsor who might need to sell a property during tough times to make enough money to support their own budget even it it might not be the best time to optimize disposition value. The financial stability of your sponsor will help ensure that they have the resources necessary to execute on their investment strategy, manage their investments, and continue managing your investment well during any market downturns

Operational Expertise

A key component of a sponsor’s ability to successfully manage properties is their operational expertise. Look for a sponsor that has a deep understanding of real estate operations, including property management, leasing, and asset management.

Consider the sponsor’s team and their experience in these areas. Look for sponsors that have a strong team with a mix of experience levels and diverse backgrounds. You should also consider whether the sponsor has a strong network of third-party service providers, such as property managers and leasing agents.

Founded in 1992 and weathering many market cycles, our group of senior leaders have an average of over 15 years of tenure with our firm, together with over 120 years of real estate investment experience.

Access to Capital

It is important to consider whether the sponsor has access to sufficient capital to execute on their investment strategy, and whether they have a strong network of investors and lenders. This will help ensure that they are able to acquire and manage properties effectively. Wilkinson has deep relationships with a variety of lending sources from Fannie Mae, Freddie Mac as well as other lending and capital sources.

Communication and Transparency

Investing in private real estate can be complex, and it is important to choose a sponsor that communicates clearly and transparently. Look for a sponsor that provides regular updates on the performance of your investment, and that is responsive to your questions and concerns.

Consider the sponsor’s track record of communication and transparency and ask for references from previous investors. You should also review the sponsor’s offering materials to ensure that they are clear and comprehensive.

Clients have full access to due diligence materials, property reports, fund and property level financials including balance sheet, statement of cash flows, budget and pro proforma to actual variance reports and all tax documents through Wilkinson’s investor portal. More importantly, we are accessible to our clients. Our clients are our priority. If you ever have a question or need assistance, our team is ready to assist.

Alignment of Interests

Make sure the sponsor’s interests are aligned with yours. Consider whether the sponsor has a meaningful equity stake in the investment, and whether they receive performance-based incentives. This will help ensure that the sponsor is motivated to work in your best interest and deliver strong returns.

You will see Wilkinson Corporation investing alongside you in our funds and in our properties directly. With a target of 5-10%, for every dollar our legacy clients have currently invested in our funds, Wilkinson has invested over 15% of the capital invested in the funds and underlying properties.


Finally, consider the sponsor’s reputation within the real estate industry and among investors. Look for a sponsor with a positive reputation and a proven track record of ethical behavior. This will help ensure that you are working with a sponsor that is respected and trusted within the industry.

In conclusion, selecting a private real estate sponsor is a critical decision that can have a significant impact on the success of your investment. By considering these factors, you can help ensure that you select a sponsor that is well-equipped to help you meet your investment goals and deliver strong returns over the long term.

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